GARDEN LAKES v. ZIZLSPERGER

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NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24 IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE THE GARDEN LAKES COMMUNITY ASSOCIATION, an Arizona nonprofit corporation, ) ) ) ) Plaintiff/Appellee, ) ) v. ) ) JOSEPH ZIZLSPERGER and JUDY L. ) ZIZLSPERGER, husband and wife, ) ) Defendants/Appellants. ) __________________________________) DIVISION ONE FILED: 07/31/2012 RUTH A. WILLINGHAM, CLERK BY: sls No. 1 CA-CV 11-0283 DEPARTMENT C MEMORANDUM DECISION (Not for Publication Rule 28, Arizona Rules of Civil Appellate Procedure) Appeal from the Superior Court in Maricopa County Cause No. TJ2010-000251 The Honorable Benjamin E. Vatz, Judge Pro Tempore AFFIRMED Maxwell & Morgan P.C. By Charles E. Maxwell Brian W. Morgan Paul R. Neil Attorneys for Plaintiff/Appellee Weisberg & Meyers, LLC By Marshall Meyers Aaron D. Radbil pro hac vice Attorneys for Defendants/Appellants S W A N N, Judge Mesa Phoenix ¶1 Joseph and Judy Zizlsperger appeal the superior court s award of attorney s fees for services rendered by Garden Lakes Community response to Association s the ( Garden Lakes ) Zizlspergers contentions that attorneys the in attorneys violated the Fair Debt Collection Practices Act (the FDCPA ). Finding no error, we affirm. FACTS AND PROCEDURAL HISTORY ¶2 for In October 2009, Garden Lakes sued the Zizlspergers failure to pay their homeowners association fees as required by the Covenants, Conditions, Restriction and Easements ( CC&Rs ). A default judgment (the judgment ) was entered against the Zizlspergers for $318.73 in principal; $600.00 in attorney s fees; and $206.00 in costs. The Zizlspergers were further ordered to pay all reasonable costs and attorney fees incurred by [Garden Lakes] . . . in collecting the amounts listed in this Judgment. 1 ¶3 In an effort to collect on the judgment, Garden Lakes served a writ of garnishment on Mr. Zizlsperger s employer. The Zizlspergers objected, claiming that Garden Lakes did not have a valid Judgment against [them] or that the Judgment [had] been paid in full. After a hearing, the court affirmed the validity 1 Garden Lakes CC&Rs also provided that the Member shall be liable for all costs, including attorneys fees and collection agency fees, which may be incurred by the Association in collecting the [delinquent assessments]. 2 of the writ of garnishment, but reduced the garnishment rate from 25% to 15%. At the time the writ of garnishment was served, the Zizlspergers owed a net balance of $2,192.74 on the judgment. ¶4 On November 1, 2010, the Zizlspergers sent a letter accusing Garden Lakes counsel of violating the FDCPA. The Zizlspergers proposed to settle the FDCPA claim for $10,000 and an agreement from Garden Lakes counsel to cease all collection activities. ¶5 Garden Lakes counsel rejected the offer. Over the next month, the Zizlspergers and Garden Lakes counsel engaged in an extensive series of written and verbal communications accusations. over the validity of the Zizlspergers On December 8, 2010, Garden Lakes moved to confirm the reasonableness of fees incurred pursuant to the judgment. Two days later, the Zizlspergers stated that they were no longer pursing the FDCPA claim and withdrew their demand for $10,000. In response to the motion to confirm, the Zizlspergers argued that Garden Lakes was not entitled to its requested fees because the fees were (1) excessive; (2) related to their good faith objections to the writ of garnishment; (3) related to Garden Lakes counsel s own defense to the Zizlspergers separate FDCPA claims; were and not (4) incurred the in Zizlspergers connection with responsibility. 3 assessments The that Zizlspergers also stated that they still intended to sue regarding the alleged FDCPA violations. ¶6 The court held an oral argument, during which the Zizlspergers admitted that they had not yet filed a FDCPA claim. The court ruled that the fees for services rendered in response to the FDCPA allegations [were] inextricably intertwined with services rendered in collecting upon the underlying judgment. ¶7 fees The court awarded Garden Lakes $7,367.50 in attorney s and $566.66 timely appeal. in post-judgment costs. The Zizlspergers We have jurisdiction pursuant to A.R.S. § 12- 2101. DISCUSSION I. ¶8 ENTITLEMENT TO FEES We will not reverse an award of attorney s fees absent an abuse of discretion.2 Orfaly v. Tucson Symphony Soc y, 209 Ariz. 260, 265, ¶ 18, 99 P.3d 1030, 1035 (App. 2004). An abuse of discretion occurs when a court commits an error of law in the process of reaching a discretionary conclusion. Grant v. Ariz. Pub. Serv. Co., 133 Ariz. 434, 456, 652 P.2d 507, 529 (1982). We find no abuse here. 2 In reviewing a superior court s discretionary fee awards, we view the record in the light most favorable to sustaining the court s decision. Rowland v. Great States Ins. Co., 199 Ariz. 577, 587, ¶ 31, 20 P.3d 1158, 1168 (App. 2001). 4 ¶9 Relying on Modular Mining Systems, Inc. v. Jigsaw Technologies, Inc., 221 Ariz. 515, 212 P.3d 852 (App. 2009), the Zizlspergers contend that Garden Lakes attorney s fees for services rendered in responding to the FDCPA allegations were not recoverable because they were separate and distinct from those rendered collecting on the judgment. ¶10 In Modular Mining Systems, this court held that attorney s fees for defending against a tort claim are properly awarded under A.R.S. § 12-341.01(A) where the tort claim and contractual claim were inextricably interwoven. 521-22, ¶¶ 22-23, 212 P.3d at 859-60. 221 Ariz. at A tort claim and a contract claim are inextricably intertwined when they involve the same factual development and legal research. Id. at 522-23, ¶ 24, 212 P.3d at 860-61. ¶11 Unlike Modular Mining Systems, though, only one claim -- the contract claim -- is at issue here. that FDCPA development litigation and legal would research involve than the Although we agree different contract factual claim, the Zizlspergers admit that no FDCPA claim had been filed at the time of the hearing. Because no FDCPA claim was ever before any court, the analysis in Modular Mining Systems does not apply.3 3 The Zizlspergers did not file a FDCPA claim until July 12, 2011, more than four months after the court s decision. Any fees incurred in defending that action were therefore not part of the award at issue in this appeal. 5 Therefore, because the contract and the judgment only awarded fees incurred while collecting on the judgment, the court only had to determine whether the services rendered in responding to the Zizlspergers accusations of FDCPA violations were sufficiently connected to those incurred in collecting on the judgment. Based on the record before it, the court had sufficient evidence to find the services were intertwined. ¶12 When the Zizlspergers suggested that Garden Lakes counsel had violated the FDCPA, they proposed to settle the matter for $10,000 activities (i.e., judgment). if if Garden Lakes Garden cease[d] Lakes ceased Garden Lakes rejected their offer. all collection enforcing the The Zizlspergers proceeded to make several inquiries as to the validity of the judgment and Garden Lakes attempt to enforce it.4 answered each of these requests. Garden Lakes These communications therefore were services rendered in an attempt to collect on the judgment. The Zizlspergers attempt to identify which services related to the FDCPA does not change the outcome because no FDCPA claim was pending. Because the Zizlspergers continually challenged the judgment and Garden Lakes efforts to collect on it, the court had a reasonable basis for awarding fees. 4 The court also referenced the Zizlspergers motion to set aside the judgment, but no such motion is included in the record on appeal. 6 II. REASONABLENESS OF FEE AWARD ¶13 was The Zizlspergers next argue that the amount awarded unreasonable. awarded for an We abuse review of the amount discretion. of ABC attorney s Supply, fees Inc. v. Edwards, 191 Ariz. 48, 52, 952 P.2d 286, 290 (App. 1996). ¶14 The judgment specifically awarded Garden Lakes all reasonable costs and attorney fees incurred collecting on the judgment. Garden Lakes fee affidavit, as required, disclosed the type of legal services provided, the date the service was provided, the attorney providing the service . . . and the time spent in providing the service. Schweiger v. China Doll Rest., Inc., 138 Ariz. 183, 188, 673 P.2d 927, 932 (App. 1983). It also provided sufficient detail to enable the court to assess the reasonableness of the time incurred. ¶15 Id. Because Garden Lakes established its entitlement to fees and met the minimum requirements in its application and affidavit, the burden shifted to the Zizlspergers to demonstrate the impropriety or unreasonableness of the requested fees. State ex rel. Corbin v. Tocco, 173 Ariz. 587, 594, 845 P.2d 513, 520 (App. 1992); see also McDowell Mountain Ranch Cmty. Assoc. v. Simons, 216 Ariz. 266, 270-71, ¶ 20, 165 P.3d 667, 671-72 (App. 2007) (after party seeking fees establishes prima facie entitlement to fees in the amount requested, party opposing fees must show they were clearly excessive). 7 [A]n opposing party does not meet [that] burden merely by asserting broad challenges to the application. It is not enough . . . simply to state, for example, that the hours claimed are excessive and the rates submitted too high. Tocco, 173 Ariz. at 594, 845 P.2d at 520 (citation omitted). ¶16 The Zizlspergers only specifically challenged the fees for appearing at the garnishment hearing, and generally argued the remaining fees were unreasonable. the garnishment requested fees hearing, were but The court denied fees for determined reasonable. See the United majority Cal. Bank of v. Prudential Ins. Co. of Am., 140 Ariz. 238, 302, 681 P.2d 390, 454 (App. 1983) ( Where there is conflicting evidence as to disputed facts or the reasonable inferences to be drawn from those facts, this court has held it will not substitute its opinions for the findings of the trial court. ). Because the Zizlspergers broad challenges to the application failed to prove the fees were unreasonable, the court had sufficient grounds to award Garden Lakes counsel its requested fees. See Tocco, 173 Ariz. at 594, 845 P.2d at 520. Although we may not have we awarded court s all ultimate of the decision requested fees, exceed[ed] 8 the cannot bounds of say the reason. See Associated Indem. Corp. v. Warner, 143 Ariz. 567, 571, 694 P.2d 1181, 1185 (1985) (citation omitted).5 III. ALLEGED CIRCUMVENTION OF THE FDCPA ¶17 it Finally, the Zizlspergers argue the court erred when awarded fees without finding that their FDCPA claim brought in bad faith and for the purpose of harassment. was See 15 U.S.C. § 1692k(a)(3) ( On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney s fees reasonable in relation to the work expended and costs. ). Although the court awarded fees without making the finding set forth in discussed § 1692k(a)(3), above, issued its order.6 follow the no no FDCPA such claim finding was was pending required. when the As court The superior court therefore was not bound to conditions set forth under § 1692k(a)(3) before awarding fees. 5 The Zizlspergers also claim, without citation to legal authority, that the court erred because it did not explain why it found the fees requested were reasonable. Here, the court reviewed and considered the fee affidavit, pleadings, and oral arguments before issuing its decision. The court's finding of reasonableness was sufficient. Arizona law does not require the court to define the concept of reasonableness in its order. 6 Indeed, every case cited in support of the Zizlspergers assertions involved a plaintiff who had already filed a FDCPA claim and not merely alleged FDCPA violations. See, e.g., Rouse v. Law Offices of Rory Clark, 603 F.3d 699 (9th Cir. 2010); Guerrero v. RJM Acquisitions LLC, 499 F.3d 926 (9th Cir. 2007). 9 CONCLUSION ¶18 of For the foregoing reasons, we affirm the court s award attorney s fees. Because the Zizlspergers are not the successful party on appeal, we deny their request for attorney s fees. Garden Lakes has requested fees pursuant to Section 7.9 of the CC&Rs, the judgment, and ARCAP 21. Garden Lakes is the prevailing party on appeal and is thus entitled to its appellate fees and costs upon compliance with ARCAP 21. See A.R.S. § 12- 341.01. /s/ PETER B. SWANN, Judge CONCURRING: /s/ PATRICIA K. NORRIS, Presiding Judge /s/ DONN KESSLER, Judge 10

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